California mulls energy storage mandates

Critics point to pilots, advocate cautious steps

As you may recall from our coverage, the California Public Utilities Commission has been wrestling with whether to establish procurement targets—i.e., mandated purchases—of energy storage technology to fulfill the demands of that state's Assembly Bill 2514.

While it would be insane to summarize the situation in a few words, insanity is my business—let's call it brevity. Here goes.

Legislators bought the storage vendors' thinking that progress on integrating renewables, for instance, wouldn't happen unless investor-owned utilities were forced to procure and implement new energy storage technologies. Regulators are obligated to consider that position. The CPUC staff has recommended continued study and analysis due to the outcome of workshops that established "that there are too many considerations, barriers, issues and uncertainties to be dealt with at the same time." Utilities are already engaged in pilots to discover what roles storage technologies might serve and how they might be valued by the market. Vendors suggest that procurement targets would provide a degree of certainty to their investments and provide real-world scenarios that would be preferable to more modeling and analysis. Critics suggest that forcing procurement targets merely lays more costs at consumers' feet, prior to proven business cases; and, in the market, the services (and value) that storage might provide tend to fluctuate, making storage investments at scale rather perilous. Meanwhile, researchers (see "Energy Storage: Drivers and Goals") have noted that "storage" per se isn't a monolithic concept, that specific applications must be identified and the value of storage to deliver those applications must be established. Cost-effective storage likely means, for instance, using one type of storage for multiple applications.

Ellis' second piece appeared this week. It's worth a read, as are the comments that followed its publication.

Over the past week or two, additional parties have filed their comments on the CPUC proceeding on energy storage procurement targets and we'll feature excerpts here. For the full documents, go to the CPUC website and locate proceeding R.10-12-007.

While the California Energy Storage Alliance (CESA), a trade group designed to advance storage commercially, agreed with the CPUC staff's recommendation on continued analysis of the issue, it also urged the prioritization of issues and action on those on a track parallel to continued study. CESA suggested that a cost-effectiveness methodology would be such a priorit deserving immediate action.

"Cost-effectiveness is pivotal and foundational to optimizing the deployment of cost-effective energy storage ... and is foremost among pending issues," CESA wrote in recent comments to the CPUC.

The Sierra Club argued that AB 2514 and the CPUC's staff proposal requires the CPUC to consider procurement targets after cost-effectiveness has been analyzed. The Sierra Club rejected arguments by the state's Division of Ratepayer Advocates and Pacific Gas & Electric that procurement targets be taken up in a separate, long-term procurement proceeding. Instead, the Sierra Club argued, the CPUC should close out Phase I of its energy storage proceeding and immediately proceed to Phase II, where a cost-effectiveness methodology can be developed and procurement targets subsequently set.

Otherwise, in short, some suggest that the complexities demand more analysis, while other parties fear paralysis by analysis—a pitfall certain to accompany any subject as complex and a technology as untested as employing energy storage on the grid with an apples-to-apples method for determining its cost effectiveness in the market.

Fact is, California wants to move ahead with whatever technologies will bolster reliability and capacity of the existing grid, help integrate 33 percent renewables by 2020 and transition away from fossil fuel-fired generation. Government, reflecting the will of the people, can sometimes make a difference through policy. Yet the corollary is a distortion of the market and, possibly, needless costs on the taxpayer. In that sense, this proceeding is reflective of many conversations about clean(er) energy taking place in this country and, indeed, around the world. It bears scrutiny and deep thought.

storage

- Mar 1, 2012 - 12:00 PM

As a independent consultant for a pumped ydro develpoment company I'm aware of the profound resistence applied by utilities who host a fleet of single cycle "peakers" for the integration of renewables. However since the project is getting closer to recieving its FERC license and will become a reality the utilities are asking for a piece. They recognize that it might be better to join forces rather than compete against a better cheaper integration resource. There are a lot of market issues to work out but I suspect that will happen when storage resources become reality.

Pumped Storage

- Mar 1, 2012 - 11:06 PM

I'm also curious. If the project's target market is California, I'd be interested in hearing how you plan to deal with the ISO auction structure, which is probably the biggest obstacle to successfully operating a grid-scale storage project once its built.

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